washington, d.c. right now. a $1.1 trillion spending plan, with emotions running high with so-called pork projects. it provides funding for more than 5,000 congressional pet projects. i am john king, and this is "state of the union." president obama outlines a new plan to get americans back to work. >> because our work is far from done done. >> but have his prior promises been kept? i will ask the president's tom economic advisor, lawrence summers. and then the economy, the deficit and the fragile health care negotiations.

we will have john thune. and then young doctors choosing a specialty over primary care. this is the "state of the union" report for sunday, december 13th. we begin this summnday with numbers. 328 days into the obama presidency, and 299 days since the administration's economic stimulus was signed into law. 13 days from christmas, some signs many of you are willing to dig deeper this season. but not so encouraging numbers are there as well. the national unemployment rate of 10%. while mortgage rates are below 5%, many americans say banks, even banks are being more than

grinch-like when it comes to handing out president. the president meets with some of the bankers at the white house, and wants to dip into the bailout funds to create more jobs on main street. the director of the national economic counsel, lawrence summers, joins us from boston. good morning, mr. summers. >> good to be with you. >> good to see you in the greatest city in america. boston, massachusetts. let's begin with the questions so many people are asking, they ask themselves for months now when are the jobs coming back? we are at 10% unemployment. when will we see 8%, 7%, 6%? >> john, it will take time. a year ago the question was would we have a depression? today everybody agrees that the recession is over. the questions are around how

fast we'll recover. experience is that it takes significant time. first gdp increases. we have seen that start to happen. and then firms ask the workers already with them to work more hours. and that's starting to happen. and then net job creation starts to happen. we were losing 700,000 jobs a month when president obama took office. last month we lost 11,000. we are getting there. most professional forecasters expect job growth by spring and i think that's a reasonable judgment in an uncertain world. and then after employment growth, given that when you start to create jobs, more and more people start looking for work because they are encouraged, and it takes further time until you reduce unemployment. but on the key measure, is the economy creating jobs or are jobs still on net being

destroyed? most people now think that we are looking to see that by spring. some forecasters think it will happen sooner. some forecasters think it will happen later. but we are a lot closer than where we were a year ago, and the signs that are the first signs that things are turning, the output starting to grow, and the hours worked starting to increase. we are now seeing progress. that's not nearly enough, not nearly enough. we have to do a lot more. there is no more important issue facing the country than job growth because if we don't create jobs we have got no prospect at the kind of budget deficits we want. if unemployment stays high, we are not going to have the strength in the world that we wa

want, if unemployment stays high. the president is working hard to implement the recovery act. it takes time to bring projects online. there will be twice as many projects going in the next six months as there were in the last six months. that's why we are working to support the private sector by encouraging credit to small business, and doing as much as we possibly can to promote u.s. exports at a time when we should be competitive in the global economy. and that's why the president announced this week a set of principles to guide us going forward, emphasizing the importance of small business, and the importance of infrastructure, and the real need for us to start making investments on a much greater scale, and incentives for investments on a greater scale in energy investments.

there are investment for many of the viewers out there to make investments in their home where they will get a high rate of return, they will spend $1,000 today and save hundreds of dollars each months going forward. we have to get the right kinds of partnerships going between the public and the private sector to encourage those kinds of energy efficiency investments, just like the cash for clunkers program, suppurred lot of spendsing over the summer. and we will have to do things to support people as they make improvements to promote energy efficiency. >> let me jump in here. one reason we are in the ditch is because of big mistakes. the president says in a "60 minutes" interview that he is worried many of them still don't get it. what don't they get and what

must they do? >> here is what i think they don't get. it was irresponsible risk taking that brought the economy to the brink of collapse. it was their irresponsible risk taking in many cases that brought the economy to collapse. and frankly after the asian crisis and the 1987 stock market crash, and after other things that happened, it was not the first time. and they don't get in some cases that they wouldn't be where they are today, and they certainly would not be paying the bonuses they are paying today if their government hadn't taken extraordinary actions. extraordinary actions, not frankly with the motivation of helping them, but with the motivation of helping the

economy of which they were nonetheless of beneficiary. for them to be complaining about serious regulation directed at making sure this never happens again is wrong. for $300 million to be spent on lobbyists trying to gut serious efforts at financial reform is not how this country should be operating. for firms that have benefited from taxpayer support to be complaining about the government burdening them is frankly a bit rich. the country took necessary steps. it helped because there was no other way. the financial community, they have to think about its

obligations to make sure we don't see a recurrence of what took place again, which goes to stronger financial regulation, and it goes to making sure that we are doing everything we can. everything we can to prevent foreclosures, and to enable families to stay in their homes. when some institutions are saying they can't lend to small businesses because they don't have enough capital, they would have more capital if they were not paying it out to their workers in the form of very great bonuses. so the president is going to focus on what the bankers can do

for their country, what they -- what obligations they should feel at what -- even with the improvement is still a critical juncture for our economy. >> let me talk to you about a challenge, and i want to play out for something for the viewers to see. congress is about to pass the debt celling. here is what was in the clinton administration. it goes from 4.37 up to $12.1 trillion. the government now authorized to borrow. congress is going to raise that up a bit even more. $1.4 trillion, record budget deficit last year. and larry summers, even as families around the country have to cut budgets and make concessio concessions, congress will vote on a spending bill that will give a dozen cabinet agencies sometimes nine or even a 12% spending increase. this administration says next year will be the focus and

discipline on debt reduction. why not say now we need to start, and that's too much spending? >> a couple points, john. first, people study the graph slowly and carefully, and they will see the debt was actually going down in the late years of the clinton administration. frankly when a new administration took place in 2001, all the innovations came off, and we spent and did a whole new prescription drug program paying for none of it, and at the same time we launched massive tax cuts. and that's why the ten-year deficit protection that president obama inherited was $8 trillion. that's what happened. and president obama recognizes that we have got an obligation to fix it. frankly, for the next year or

two, priority number one, certainly this year, priority number one has to be job creation. that's why we are putting people directly to work. but then the priority has to be getting the country's finances under control. that's going to be very clear in the rigorous budget that the president proposes. that's clear in how the president with very strong support of secretary geithner has administered the t.a.r.p. program. just this week we were able to announce that more than $200 billion improvement in the projection on that program. we are starting to collect the funds back with interest and dividends on a substantial scale. the bank of america, for example, paid back some $45

billion that is now available for taxpayers. we are very focused. the president has said that on health care we are not going to put in to place -- he is not going to sign any legislation that increases the deficit at all, and in fact, the legislation provides a framework that will enable a significant budget cuts. it's a challenging agenda. what we have got to do is make sure the economy starts growing again and growing strongly, because if we don't do that, it's going to be enormously difficult to make progress on the deficit. and then once the economy recovers, make sure in every way that we can that our situation becomes more sustainable, and the president has made clear his willingness to be part of any system that will bring the congressional leadership of both

parties together or around that crucial objective. >> when we come back, we will talk more about that, the tough choices the president and the congress will face if you do try and get the deficit down? more to talk about with the president's top economic advisers, lawrence summers. stay with us. (announcer) it's what doctors recommend most for headaches. what doctors recommend for arthritis pain... in your hands... knees... and back. for little bodies with fevers... and big bodies on high blood pressure medicine. tylenol works with your body

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back with lawrence summers, the director of the national economic summit. you said the president is trying to sit down to try and get the deficit down. can the chairman of the committee, judd gregg, could the ranking republican from the

state of new hampshire, he says they should come up with a plan and congress has to vote up or down, yes or no, tough choices, spending cuts and tax increases in there, but you have to vote up or down and make tough choices. just on the basic premise, would the president say yes i would support that plan? >> president obama -- the president wants to see the problem solved. he is open to a wide range of approaches. but, of course, it depends on where all the congressional leadership are. anything that will bring together the house of representatives and the senate democrats -- >> let me jump in. >> the president will be very open to it. >> a lot of people that control the money don't want that commission. they feel it takes away their power to appropriate and their power to raise taxes. you said you were paying down the debt when you left the clinton administration, and we

had a balanced budget, and there are other people that say if we are going to make tough choices, take the politics out of it. why doesn't the white house say yes or no and make them do something else? >> the president wants to see the problem solved. he is prepared to accommodate others on the way that will work to do it. what is important is that the problem be solved. adopting an approach that some people favor and other people will block, that won't work if they have the capacity -- if they have the capacity to block it. so the president is consulting widely with the congressional leadership in both parties, in both houses of the congress, looking to craft and approach what works. this is crucial for the future of our country. you know, people need to

understand that we need to do both and focus both on jobs in the short run, because if the economy doesn't grow, the deficit situation becomes impossible. and on the deficit situation for the medium run, because if we don't have confidence that comes from sustainable deficits, it's going to be very hard to grow jobs. so we need really to be moving very aggressively on both fronts, and the president is very pragmatic. he knows that we need to move on both of these fronts. he is determined to do it. he proposed concrete steps in both areas. he is prepared to work with others, because this is a democracy in whatever way will be most effective to bring about the objectives? >> he is the most powerful member of his party. we obtained a document that indicates there is a divide among the president's economic lead which you help lead on this

very question, on the question if you had such a commission how big of a scope would it have? should the president -- one of the proposals is would the president preempt the congress with proposals of his own? do we need a commission and how broad should the scope be? >> i stand where i said i stood, and where the president stands. we need to solve this problem. >> but we don't know where he stands. >> we are prepared to work with others, but we live in a country with an executive branch and with a legislative branch, and two parts of the legislative branch, the house and the senate, and any approach to be viable has to be an approach that works for both of them, statutory commission, and executive, and commission, direct action through the appropriations process. that's not really what is

fundamentally important. what is fundamentally important is that we find a solution that works. the president will be open -- is open to any approach that offers the prospect of controlling the budget deficit. let me just say, all of his advisers are agreed on the importance of deficit reduction in the immediate median turn. >> let's take a year end report card on the stimulus plan. it's important to the president and become controversial politically. let's let the president himself layout what he called the test for this program. >> my administration has begun implementing the reinvestment act, which will save jobs, and 90% will be in the private

sector. >> some people dispute these numbers, these are the admin stations own numbers. as you noted earlier, a lot of the spending is still to come into the pipeline next year. will you make that 3.6 million? will you create or save 3 million jobs next year or does the administration need to revise that figure? >> you know well, you are comparing apples and oranges. there was no october taken from the tax cuts and the extra spending, and took no account that when you put somebody to work they spend money and there is a multiplier affect that puts other people to work. the congressional budget office, which is not our administration, and certainly has been a thorn

in the sign of administrations for a very long time estimated last week that the program had already created up to 1.6 million jobs. the number of projects under the program, according to the projections, and it's on schedule, it will basketball twice as great over the next six months as it was over the last six months. i don't think that there is any question that the recovery act is serving its intended function. look, look at the economic debate today. people are talking about how much job creation there will be, and talking about the pace of the recovery from recession. we are not where we would like to be as a country, but, gosh, it's different from where it was when the recovery act was passed, when the question was whether we would have another great depression, and the question was whether the financial system would collapse. we have a long way to go. we are starting to see the basic

mechanism of recovery, people spend and that creates income for other people, and they spend, and that creates more income, and that creates more income and they spend. that process of recovery is starting to engage. that's really an accomplishment of the recovery act. we are very satisfied with what the impact of those measures have been even as we recognize that the rate at which people were laid off in the spring was something that went way beyond what any forecaster last winter was expecting. >> larry summers, we thank you for your time this morning. >> thank you. >> take care. coming up, two key senators weigh in on jobs and the push for health care reform. stay with us.

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here are the stories breaking this sunday morning. goren brown is renewing his commitment. history is made in houston's politics. the city elected its first openly gay mayor in a runoff election last night. parker who firmly backs fiscal reform.

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you just heard from the white house. now let's get perspective from the other side, the other end of pennsylvania avenue. gentlemen, good morning. let's start with the spending bill you are going to have to vote on today. i will start with the democrats since you are in charge up there. these cabinet agencies some of them are getting 9% and 10%, and some are getting 12% spending increases. everybody out there watching this morning, i doubt we can find somebody saying yes, the family budget will grow by 10% next year. >> law enforcement, i think they need that support. on a longer term i believe the process totally has gotten out of control. i am a new senator. i came from being a governor where we had to balance our books each year. i think the way we will get spending long term under control is to get bipartisan commission,

and democrats and republicans come together and put revenues and spending out there and come back and vote up straight and down. i don't see how the process where everybody kind of goes on is going to come to an end until we have the discipline to do a straight up or down vote on revenues and spending cuts. >> a former governor and democrat endorses the commission approach. i tried to get the president's economic advisor, he says he wants to do something about it but would not be specific, would not say yes or no to a commission. would the republicans support that if in the end you have to vote up or down, and george h.w. bush could have tax increases in it? >> it doesn't mean the republicans would vote for what the commission remsz, but i think we have to have a mechanism where we have control of spending. and i think the problem is, john, like closing the barn door after the horse is out.

we barrowed to pay for a stimulus bill, and then as you mention the aproposation bills coming in, year over year at 12%. so you are increasing spendsing at the federal level at 12% year over year when americans are having to tighten their belts. we are trying to stop the bill from being voted upon and come back with a reasonable propose pum i don't disagree with have to fund government. we would agree with that. what i disagree with is the year over year 12% increases after having passed a stimulus bill, much of will be distributed to the same agencies that will get the benefit of the bill. >> whose fault is this? >> neither side has clean hands.

i think we have to recall what -- actually, your previous guest said, eight years ago the country had a surplus. we saw over the last eight years a trillion dollars spend on the wars. >> let me jump in for one second. let's assume -- >> i think at some point we have to say time-out here in short term. we will need to keep spending. we have to have a plan in place which both sides can agree on, democrats and republicans, and both have to make hard choices. i did that as a governor. and i think that we need the same discipline here. the only way to get it done is if we say bipartisan, come together, vote it straight up or down, take our lumps in spending and revenues. >> the former governor says that. but here is what max baucus says. the idea of the commission where

it's tough choices, a you put something together and have to vote up or down. he says this, if we were tie our hands to not have the recommendation. why is it that the chairman of your big important committee there, the speaker of the house on the other side opposed this idea. if this needs to be done -- forgive me, and i will skip you senator for a second, you have 60 democratic votes or 58 not counting the independents in the united states senate, i will concede your point saying the republican administration dug most of the ditch, but you are in charge. >> the only way we get the hard choices made in spending side and the revenue side if it's

bipartisan. i am a new guy in the senate. everything divides at the door in terms of democrat or republican. if there is a time to chuck the r hat or d hat, it's now. i think this would be the time for that kind of bipartisan approach. and frankly, i do think that there are some that don't want to change the system, but there is a moment of crisis, and this is a moment and i think the american people realize it, and the markets are looking at whether we will be able to get this control over the long haul. it's going to take time, but we have to start down a path that will get us to a straight up or down vote. >> do you believe that we could start down a path to real deficit reduction without some tax increases. i want to go back to the george h.w. bush battle, many think he lost his job because conservatives say he broke his promise on the read my lips i

will not raise taxes. can you have reduction without temporary tax increases. >> i think you have to start with spending. think about this. we will vote today in the united states senate on an appropriation bill that increases spending 12% over last year, when the consumer price index was negative. and mark is right, republicans share some of the blame. we were in charge. we did not control spending well enough either. you have a democrat president, democrat majority in the house and senate, and all of them have their foot on the pedal. they are driving this thing over the cliff. somebody has to put the breaks on. what we are trying to say is let's put the breaks on the spending side. obviously there is revenue in spending. the components interact. until you deal with the spending issue here in washington, d.c., we are never going to get the fiscal situation under control. we are never going to be able to see the kind of economic

prosperity that we have seen in the past. >> i am going to assume the democrats have the votes to pass this today. this bill will pass and the republicans will complain and move back to the health care debate. and one of the key questions is health care costs are going up like this, and can you bend it. as you both know, there was a report this week from an obama administration, and he raises some questions about this, as to whether the senate plan bends that cost curve? do you think more needs to be done? >> i think frankly earlier this week a group of freshman senators put together a whole series of amendments that did not get a lot of attention in terms of headlines, but all about trying to take programs that work in the private sector and bring them into the health care system in terms of what the government spends, trying to lower administrative fees. we have broad base support from it, and business roundtable, and national association manufacturers, consumer groups

and even some of the hospital groups came forward and said we need more around cost containment. what i have not heard from the republican colleagues that say let's start over again, which i may be new to washington, but that means let's pump tpunt the problem for a few more years. average south dakota family will pay 40% of the income on health insurance premiums. i spent 20 years in the business world. if america cannot drive down our health care costs, the biggest single i think restraint on american business, no matter how productive our workers are are health care costs. so we have got to make cost containment. that has been my statement from the beginning of the debate, cost containment has to be the driver. and it did also include the fact that it does expend medicare's life for nine years and the actual referee that i think both sides perhaps have problems with

at times but has been called the referee for the whole health care debate, the cbo said this plan has to get rescored now as the final package compromise comes together, and this plan will actually lower the deficit $130 billion in the first ten years, and over $500 billion in the second ten. and then they will see premiums decreased or stay the same. is it perfect? no. but we have a crazy basis of fee for service, and we need to head in that direction. >> if the freshman group has success, is this where you will say we will come onboard, or will you try to block it? >> we hope there are democrats that will step forward and help

defeat the bad idea. the republicans are not for doing nothing. we have a number of solutions according to the cbo curb the cost down, but the ironic thing is doing nothing would be better than doing what they are proposing to do. as mark said, the whole objective ought to be the bend the cost down, and you have the congressional budget office saying the health care proposal will increase the cost and bend the curb up, and you have the cms ak chau wary saying 20% of the hospitals will close, and 17 million people will lose employer-based coverage. and this was a devastating week in terms of this proposal that is currently before the congress, and it needs to be defeated. we need to start over, and we need to focus on what mark just said, and that's cost containment. unfortunately, this bill does not do that. >> jim webb voted with the republicans on the question of medicare savings or cuts, and

people use different words depending on the perspective of the bill. is that where you need to go back to the drawing board? >> first of all, i hope john will work with us on this bill. the remarkable thing is, on medicare savings -- i think we have to find the medicare savings. in effect, what some of my friends on the other side are saying we cannot touch medicare or the rate of increase, and if we can't do that we are rearranging the deck chairs on the titanic on the costs, and it will send our country down and economics down. i believe a lot of savings have been proposed by the health care providers themselves that said if we start to change the way we pay for health care -- think of the system we have right now, john. we basically pay for volume. hospitals that have high readmission rates get paid more than hospitals that do a better job of keeping you out of the

hospital. we need to make sure we don't have a fee for basis service. we pay providers for the health care out comes, not simply the volume of tests that you get, the number of drugs you receive, and the number of nights you stay in the hospital. this effort -- this bill, perfect? no. we have to come back and fix it more in terms of changing the whole incentives. i may be new to washington, but i have heard let's start over is code for let's punt for another ten years on a problem. if we punt for another ten years, it will be a disaster. >> i want to ask you, i was in your state earlier this year, and ranchers and small businesses in rural america says we bailed them up and i cannot get a loan when i go up the street. what does the president need to do to fix that in south dakota and elsewhere where farmers are

having trouble? >> the main thing the president can do and the leadership in congress can do now is do no harm. the reason small businesses are not investing is they see the policy uncertainty over washington. they see more borrowing and more taxing and more debt and more spending, and in the health care bill, they see the premiums going up. i think the banks around the country, small banks and large banks for that matter are being very caution. they are worried about credit quality. and value of collateral. they are making decisions that they have been told by regulators they need to maintain cash reserves. i think everything starts freeing up if we can take the $2.5 trillion health care bill off the table and start over and do something that drives health care costs down, and do away with the climate change energy tax that will crush the economy, and do away with some of the paul tease that create more spending and borrowing, taxing, which are all bad for the

economy. >> i like when the senate is in business on sunday. you guys can come in another time and we will invite you back in as the debates go on. up next, a medical school puts heavy emphasis on primary care, and more doctors see joy or financial benefit in pursuing a specialty. stay with us. we should be a household name. and we will be. so you're suggesting that we change our name from florida, the sunshine state, to...? florida -- the sun life state. the posters will be so cool. sooner or later, you'll know our name. sun life financial. if you want to see the weather ahead, push here. if you want to access 10 gigs of music you just downloaded to your hard drive, push here.

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it's tough on your body pain. somewhere in america, there's a home by the sea powered by the wind on the plains. there's a hospital where technology has a healing touch. there's a factory giving old industries new life.

and there's a train that got a whole city moving again. somewhere in america, the toughest questions are answered every day. because somewhere in america, 69,000 people spend every day answering them. siemens. answers. as you just heard, here in washington a lot of the talk

about health care reform is how much will it cost? can we save money? where you live i bet many of you asked the question where can i find a doctor. we wanted to take a look at the primary care crisis in america. we went out to denver. across the country a shortage of 40,000 family doctors within the next ten years. the average medical student about $140,000 in debt when they leave school. the university of colorado denver medical school go into primary care. more than twice the national average. in american dispatch this week from denver, a look at a specialty that pays more but to some provides a greater reward. >> how are you doing today? >> this doctor is a first-year resident at an uncertain time. >> i still hear some crackles in your lungs. >> learning her craft while washington debates major changes to america's health care system. >> i know it will probably affect the specialists more so than the primary care physicians.

so it will probably affect me as a radiation oncologist more so than a lot of the primary care physicians. >> radiation oncology will put her in the fight against cancer, not when she envisioned when she came to the university of colorado denver. >> initially when i started medical school, i wanted to go into pediatrics. i did think about primary care. they're needed. i think it's also important to know what would be the best fit for you. >> you say your back has been hurting you -- >> dr. john bell lynn jer on the other hand knew he wanted to be a general practitioner and hang his slate in a rural community where doctors are hard to come by. >> i enjoy a wide variety of things. so the full breadth of medical practice. >> he opened his clinic nine years ago. before that it had been 40 years since this tiny town had a doctor. many patients are poor and lack insurance, but they are welcome.

>> my salary is a lot less than the average family practitioner. our average cost is $20 for a visit. we never turn anyone away because they can't pay. >> this is a sign of the times. no new patients because one doctor can't meet the demand. >> we're overwhelmed. we hate that, but at some point you have to go home. >> why would you say it's getting better. >> his priority in health care reform is incentives to make it more attractive and more affordable. >> people come out of medical school with huge debts. that changes how they approach the rest of their life. >> there's another guy in the class of 28 -- >> dr. richard krugman agrees money is one appeal of choosing a specialty over primary care. >> if you're leaving school with $150,000 in debt, that will impact a career choice. >> but he also sees other

pressures. >> most faculty at schools of medicine and most faculty anywhere are probably looking to make their students into grave en images of themselves. that's how you get rewarded. if 40% of the class goes into the specialty and you were their teacher, that's pretty rewarding. >> it's more when i breathe in. >> when you breathe in. >> yet university of colorado denver's med school graduates primary care doctors at twice the national average. >> they have primary care experience for three years a half day a week from the first month of medical school until the end of the third year. most other schools stop that at the end of the second. we keep it going. >> it's getting worse. his liver is being shot. >> this doctor gets help with tuition from her father and says passion, not money is at the root of her desire to pursue a specialty. >> a lot of medical students factor in the financial compensation of their

specialties. >> she knows congress is debating major insurance changes and some could significantly impact how doctors are paid. but she says she isn't following the debate all that closely, but not because she isn't interested. >> i did during medical school, not so much as a resident. we don't really talk too much about it. >> too busy? >> too busy, i think so. they keep us talking about our patients too much. >> our thanks to the doctors of university of colorado denver for their help and insights. we want to say good-bye to or international audience. up next, howard kurtz and reliable sources look at big changes for abc news including diane sawyer's new gig. businesd to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now.

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